Personalization is the key to an effective estate plan. The best estate plan is one that reflects your goals and values, minimizes risk for the beneficiaries, and addresses the specific circumstances of your life.
I recently met with a potential client who created his estate plan just after his son was born—he had every intention of taking care of him. But the trust left 70 percent of his assets to his girlfriend, the child’s mother. The remaining 30 percent was divided among his parents and siblings. His son was only provided for as a contingent beneficiary. What does this mean? Only if this child lost his mother and then lost his father would this child receive his full inheritance from his father—potentially millions of dollars. Additionally, the trust provided for the full distribution of all assets to the child on his 18th birthday, regardless of the child’s ability to responsibly manage so much money. There was no provision for continued voluntary support payments to the mother should the client become incapacitated, leaving his son and his mother exposed to financial hardship before the father’s death.
Before we discussed his assets, the potential client was surprised when I asked him some basic but fundamental questions: “Who do you love?” “Who do you trust?” “Who do you want to ensure is taken care of if you die or can’t make financial or medical decisions?” I asked him what opportunities he wanted his son to have as he grew up. He was thrilled to learn that I could draft a trust that would provide his son with guidance and structure and reflect values important to the father—sportsmanship, entrepreneurship, musicality, and independence while protecting his assets from creditors. The estate plan he had in place did none of these things.
The dad realized that giving his son’s assets to his mother exposed those assets to risk. For example, the mom could be liable in a lawsuit or suffer a major medical condition, exposing her inheritance to liens.
He was also surprised to learn about our guardianship nomination form, which is extensive. The form is eight pages long. It lists guardians and backup guardians. It describes his desires for his son’s education and future, including encouraging team sports, camps, and structured musical education. The document allows him to guide the legal guardians—for example, if his son is a musical prodigy, he would like the guardians to enroll his son in certain lessons and work with specific teachers. With this guardianship form, his son’s mother also has a document that lists various traditions and people important to the dad, which will continue to provide her with support to better care for their son and to keep the child’s father’s spirit alive.
Work with an attorney who asks you a lot of questions about yourself, your values, and the people in your life (including their personalities, positive attributes, frailties, and struggles). Your estate plan does more than state who gets your assets when you die. Your estate plan allows you to share your values and express your love for and trust in the people most important to you.